life Chapter Cycle of a contract C 2 Not all promises are enforced. How to distinguish enforceable from others? Bargained for consideration versus promissory estoppels latter is rare C 3 Bargain mechanics offer acceptance revoke reject new media C4 Relational preliminary negotiations output requirements exclusivity modification In a long time relationship, contract is not clear and specific. Court struggles to figure out what is the contractor's intention. Vagueness could never invalid a contract Chapter 5 Regulating the bargaining Process not all contracts are enforced! Why: 5A Introduction Assumption contract should be enforced Default: Enforce contract Exception: excuse performance 5B.Duress - contracts are not enforced if made under duress. Reason: Not sufficiently voluntary. Agreement against the will of one of the parties. Status Restatement 174 175 176 1. old common law of duress. -Physical compulsion required. 174: When Duress by Physical Compulsion Prevents Formation of a Contract If conduct that appears to be a manifestation of assent by a party who does not intent to engage in that conduct is physically compelled by duress, the conduct is not effective as a manifestation of assent. 2. Modern Approach In a nutshell, Restatement requires an improper threat that reasonably induces assent. 1) An improper threat 2) Inducement of the promise by that threat 3) Reasonable inducement 175 (1) if manifestation of assent is induced by an improper threat that leaves the victim no reasonable alternative, it is voidable by the victim. 1) Manifestation of assent must be induced 2) Inducement must be an improper threat see 176 3) must leave the victim with no reasonable alternative (2) If a party's manifestation of assent is induced by one who is not a party to the transaction, the contract is avoidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives value or relies materially on the transaction. 176 When a Threat is Improper (1) A threat is improper if a) What is threatened is a crime or tort, or the threat itself would be a crime or a tort if it resulted in obtaining property, b) a criminal prosecution c) the use a civil process and made in bad faith, or d) a breach of duty of good faith and fair dealing
-test: would the actions be agreed to at the time of contract formation? If absolutely not, its bad faith OR (2) if the resulting exchange is not on fair terms and a) threatened act would harm the recipient and would not significantly benefit the party making the threat b) the effectiveness of the threat is significantly increased by prior unfair dealing by the party making the threat, or c) what is threatened is otherwise a use of power for illegitimate ends.
Cases: When a threat, as opposed to actual physical grounds the duress defense. Distinguish: voluntary hard bargains and involuntary bargains subject to the defense of duress Wolf v. Marlton Corp. 57 N.J Super 278, 1959 Sup c of New Jersey, Appellate Division Buyer's threat was not illegal, intended to intimidate seller into returning deposit. Seller reasonably felt no alternative so duress. Hard bargaining is OK, but motive was impermissible to duress. Because into returning deposit it is inmoral. P: Wolf Buyer of a house D: Marlton Builder PP: P won on trail but lost in appeal. Remand. Facts: K contract on house building. Dispute on payment, so plaintiff threatened resell to undesirable buyer and thereby ruin D's business. Sale was never consummated and sold to a third party. P claim recover of deposit of $ 2,450. Issue: Is resell the house to undesirable buyer to ruin the building business is a threat subject to Duress. Reasoning: Inducement by threat, manifestation of assent is induced, threat is wrongful(leaves no reasonable alternative). Old rule: A threat to do what one has a legal right to do does not constitute duress. And physical harm is required. New rule: A threat may be wrongful, even though the act threatened is lawful. If Economic, moral duress, against public policy, it is legal wrongs. Miller v. Eisele, 11 NJL 268(E.&A 1933) If the threat is wrongful or not is colored by the object of threat. If the threat is made to induce the opposite party to do only what is reasonable, the court is apt to consider the threatened action not wrongful unless it is actionable in itself. But if the threat is made for an outrageous purpose, a more critical standard is applied to the threatened action. Hachman v. Zigler's Inc, 139 N.J. Eq. 139, 143 (Ch. 1946). Economic or moral duress should be treated as the equivalent of physical duress. If one party prevents another from performing a contract, the latter may treat the contract as breached., and recover damage. Wolf v. Marlton Corp. 57 N.J Super 278, 1959
Austin instrument, Inc. v. Loral Corp. 29 N.Y. 2d 124 Sub threat not to complete first contract in order to get award for second contract AND general contractor doesn't have other sources, Then economic duress and price adjustment to 1st is binding. Winn does not agree. Appeal is not pervasive. Loran is big guy. In K1dual source $120 sole $ 100. Expost $150. Because Loren makes Austin investment. Lower court opinion will help two parties in long time relationship to work together to make the investment in the right level. So Object test is still a good law. But the court fails to consider all the related facts. Seems something wrong here? Facts: Austin threatened Loral with breach of their current contract, to induce Loral to increase the price it paid under its current contract and to award Austin its second contract. PP: Austin win Loren should win, duress constitutes. Reasoning: Economic Duress: A mere threat by one party to breach the contract by not delivering the required items, though wrongful, does not in itself constitute economic duress. It must also appear that the threatened party could not obtain the goods from another source of supply and that the ordinary remedy of an action for breach of contract would not be adequate. -Economic duress must be more than the threat of considerable financial loss, or impending bankruptcy. A breach of contract giving rise to these things can be solved in court. Duress requires something that cannot be fixed merely by paying damages. Wolf Austin: Both are economic legal threat, with a bad object. But the difference is for which ordinary damage is enough.
5.B . Fraud: when a contracting party takes affirmative measures knowing they would lead the other to erroneous conclusions regarding material issues of the contract. 1. Willful and Negligent Misrepresentation-Fraud laws protect those who are insufficiently informed through intentional misinformation during the contract A.Types of Fraud -fraud by inducement: misrepresentations to get someone to sign a contract -fraud by execution: misrepresentations of the nature of the contract itself (saying it's a contract for a new car when it really is divorce papers) B. Basics elements of actual fraud 1) a false representation or concealment of a material fact (or in some cases an opinion) susceptible of knowledge 2) made with knowledge of its falsity or without sufficient knowledge on the subject to warrant a representation 3) with the intent to induce the person to whom it is made to act upon it, and such person must 4) act in reliance upon the representation 5) to his damage ElementsFraud: Untrue stmt Intent deceive /induce R Or have obligation ? Reasonable reliance (material) Harm Innocent not fraud, but if very material, it is not fraud. But still could cancel contract. Speiss v. Brandt Did sellers misrepresent buyers ability to pay purchase price out of profit? Yes, so rescind. But dissenting ? question on reasonable reliance. What if buyers had never asked about whether purchase price could be paid out of profit? No. because the default rule is if you buy business you'd better to think about it. Danann Realty v. Harris Buyer: misleaded. Seller: not mislead but puffing. Seller's oral statements about property very positive, but written contract clearly and explicitly disclaimed any liability for prior oral statement. Exception to Parol evidence rule: Fraud. Because duty of read, so no reasonable reliance. Careful: maybe vary one case. If seller trys to mislead, intend to make it hard to read. -MUST HAVE RELIANCE ON MISREPRESENTATION -if it is a material misrepresentation, it must be reasonably (justifiably) relied on -if fraud, reasonable reliance not needed, just reliance -breach of warrantee claim: you claimed it was making money, even if we knew it wasn't, you owe us for the guaranteed business you claimed it would generate.
C. The Restatement 159 Misrepresentation: -A misrepresentation is an assertion that is not in accord with the facts 162 When a misrepresentation is fraudulent or material: 1) Fraudulent: if the maker intends his assertion to induce party to manifest his assent and the maker a) knows or believes that the assertion in not in accord with the facts, or b) does not have the confidence that he states or implies in the truth of the assertion, or c) knows that he does not have the basis that he states or implies for the assertion-basic remedy is rescission 2) Material: if it would be likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so. 164 When a misrepresentation makes a contract voidable 1) if a party's manifestation of assent is induced either by a fraudulent or material misrepresentation by the other party upon which the recipient is justified in relying Smith: must be actual reliance. However, defense that the fool was not justified in relying on a fraudulent misrepresentation won't fly. 2) if a party's manifestation of assent is induced either by a fraudulent or material misrepresentation by one who is not a party to the transaction upon which the recipient is justified in relying UNLESS the other party to the transaction in good faith and without reason to know of the misrepresentation either gives value or relies materially on the transaction. -Opinions and puffery 168, are ok. But opinions can be assertions of underlying facts. 169 reliance on an assertion of opinion is not justified, unless opinion is given by person in a special relation of trust, special skill, etc-even if there is no reliance on the misrepresentation, there may be a breach of warrantee a guarantee of quality. (buy gizmo knowing it won't work, the guarantee on the gizmo was still breached when it failed) -no reliance necessary for a breach of warrantee claim -basic remedy: damages Summary Misrepresentation Fraud Reliance Not necessary reasonable Must be reasonable Material
Induced by a fraudulent or material misrepresentation by the other party: Actual reliance and exception 164 good faith
Reliance on an assertion of opinion is not justified, unless special relation, which maybe warrantee, not need breach D. Contracting Out Misrepresentations
-when a buyer writes in a contract that no representations have been made, and that he has not relied upon any such representations, he is estopped from brining a fraud claim. -commercially sophisticated parties should be able to limit future fraud claims if they desire. This is how they do it. 2. Duty to Read: the law presumes that a person knows the contents of a document that he executes and understands at least the literal meaning of its terms. -the objective theory of contract supports the duty to read- it is an objective manifestation of assent to contract. -only claim of fraud, duress, or mutual mistake can relieve the duty to read... Restatement211: if you did not read, or did not look up these terms or ask for advice, and then turns out term is negative, and if you are not protected by costume law or ---------, you are not protected. EXCEPT: 1.Insurance company has obligation to explain for you. 2. Bailment: special provisions in a contract of bailment limiting bailee's liability, to be effective, must be known to, or brought to the notice of the bailor, and be assented to by him." (3)arbitrator- doesnot work. So why? What is the law Meri Music v. Sonnenborn In absence of fraud, Duress, if one capable of reading fail to read, is that party bound by unread terms of agreement? Yes. Birmingham TV. v. Water Works./ Harris Warehouse TV didn't notice terms on back of warehouse receipt, still bound? No. Objective theory of intent: would reasonable person know it was necessary to look for terms on back? The test of ordinary people's knowledge. 3. Disclosure and Concealment: covers cases in which the promisee (or a third party) does not make any affirmative representation at all. -basic common law: no duty to disclose unless there is some sort of relationship giving rise to the duty. -an action intended or known to be likely to prevent another from learning a fact may be equivalent to an assertion that the fact does not exist. In this case, if such "implied" assertion is fraudulent or a misrepresentation, the typical rules of the restatement apply (see above) Types of Actions that Qualify -affirmative steps to prevent the promisor from discovering a material fact -knowingly fails to disabuse the promisor of a mistaken belief about a material fact -fails to apprise the promisor of a material fact of which he knows the promisor is ignorant. -LOOK AT 161: it is KEY! 161 When non-disclosure is Equivalent to an Assertion A person's non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exit in the following cases only: (a) When he know s that disclosure of the fact is necessary to prevent some previous assertion from being a mis -mere nondisclosure is not concealment- concealment requires an action intended or known
to prevent anther from learning a fact. -latency doctrine is an affirmative duty to disclose harmful conditions of property... -in general arms length negotiations there is no duty to disclose material facts -in these cases, just don't lie! Disclose/ Buyer Silence/Seller Obligation disclose p453 very end? Termites: why must be interpreted? Mandatory disclosure: termite buy 1$ seller 100000
Defects: Reasonable efforts by buyer will not uncover. Average termite abatement Answer troth folly: termites multiple Asbestos Risk, mold, foundation Yes: superficial No: not Material 2-207 2 proCD is not enforceable. Obde v. Schlemeyer: sellers failed to disclose risk of termites( reason to know problem not solved) Is seller required to disclose something that buyer cannot discover through reasonable efforts? Held: Yes. Is buyer under an obligation to ask approate questions? ????????????? Optimal Protection: now government teach them to ask Search Detailed questioned Reduce the price. (A clause to reduce the payment if anything happen) Redd v. King Seller tried to conceal fact of murder in house, homeowner discovered later. ???????
Capacity Keifer v. Fred Howe Motors Can emancipated minor disaffirm contract upon majority? Yes. Contracts for necessities enforceable. Mispresentation Expost: Protect Rule infant wins Actually parents win. Harsh infant lose make the sale creditable? ???????????????????????????????????????????????????? Ex ante Protection Rule : could disaffirm Harsh : infant has to pay. ??????? Shields vs Gross Can adult disaffirm contract formed by parent while a minor? No. Binding. Make easier for parents to make arrangement. Under the common law, shields could have disaffirmed, statute silent, so.... Faber vs. Sweet Style Manufacturing Is party liable on contract formed while mental ill? No, if mental illness makes it impossible to weigh costs and benefits. Uribe v. Olson & Bonham Is party liable on contract formed while mentally incompetent? No but there is no evidence Ms. Olson though Mrs. Bonham was incompetent.
D. Public Policy Limitations: courts will not enforce otherwise valid contracts because they violate public policy. 1. Illegal -courts often must determine the purpose of the statute to best determine how to analyze it and apply it to facts. -"he who comes into equity must come with clean hands...it is a self imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the manner in which he seeks relief, however improper may have been the behavior of the defendant." 2. Immorality -e.g. a fraud against the public: "there is...a scheme concocted and devised by the parties to deliberately foist a fraud on the public in the manner described; in effect and ultimate result to extract from the public the cost of the book by means of deception practiced upon it." -payment for sex (Marriage Laws, etc...) 3. Unconscionability: it is an inherently vague doctrine... -courts use the label unconscionable to describe agreements whose process defects do not rise to the level of actionable fraud or duress Keys: Unconscionability has both a procedural and substantive element, which are part of
a balancing test. While a plaintiff must establish both elements to prevail, a stronger showing on one permits a weaker showing on the other. Procedural unconscionability: focuses on the relative bargaining power of the parties and whether there is any unfair surprise in the terms of the contract. Substantive unconscionability: focuses on whether the terms of the contract are so one-sided they "shock the conscience." Important Elements for Unconscionability -inequality of bargaining power -kind of procedural defects that will come up -lack of sophistication of one of the parties -does the good pertain to a necessity
Public : illegality Watts v.s Malatesta Can gambler recover losses from bookie because gambling contracts void? Yes. Stop these business expost exante Immrality In re Bay M In enforcing surrogacy contract against public policy? No. Best Interests of the child is the correct rule to apply, not contract law
Unconsicsounability Willinam vs Walker-thomas Furniture ?????????????????????????????????????????????????????????????????????????? Seabrook v. Commmuter housing Was "wait for constructing to finish term" in lease unconscionable and there fore unenforceable. Procedurally u, no tenant because tenant could understand the term. Hennigsen v. Bloomfield Motors Is it unconscionablility to allow auto manufacture to disclaim all term by dely? Yes. ?????????????????????
5. INDENTIFYING AND INTERPRETING THE TERMS OF AN AGREEMENT -in order to identify the terms of a promise, courts must look to the words or conduct of the party that manifested her intent to make the promise. -this is not about evidence, its about facts! -the facts are in the writing, and then only maybe from other places Parol Evidence Rule A. Parol Evidence Rule: evidence cannot be entered into court to alter the terms of a contract. Only unspecified terms may be added, and present terms interpreted. 1. Basics Exists for a policy reason: parties should be able to indicate what their final agreement is, and signal by agreement that something is the final agreement, but writing it down! Thus, the writing puts in the past other discussions, facts, etc. e.g. THIS IS THE DEAL not other things we discussed, not things we might think about later, etc... Intentions of the parties are what determine the final meaning of the contract, and determines the integration of the contract. -parol evidence rule prohibits introduction of evidence when the contract is fully integrated. It does NOT prohibit introduction of evidence concerning a collateral agreement (a side agreement). Collateral does NOT need separate consideration. A. Fully Integrated Contract: agreement that completely represents the agreement made by the parties. THIS IS ALL THERE IS- THERE AINT NO MORE! -Evidence of additional terms are not allowed, ever. -Explicitly stating in the contract that the contract is fully integrated is sufficient to making it so. -Using the 4 corners approach is also sufficient to find the contract fully integrated. B. Partially Integrated Contract: agreement that is final with respect to the terms in the agreement. -there might be other terms left out that are not final or undecided. 2. Common Law
"Before such an oral agreement as the present is received to vary the written contract, at least three conditions must exist: (1) The agreement must in form be a collateral one; (2) it must not contract; contradict express or implied provisions of the written
(3) it must be one that parties would not ordinarily be expected to embody the writing...it must not be so clearly connected with the principal transaction as to be part and parcel of it." 3. Restatement -parol evidence may be used to prove elements of the agreement not reduced to writing -a collateral agreement such as that alleged "might naturally be made as a separate agreement" -Issue: is there a consistent additional term? Is there a natural omission? If yes to both, the additional term might be added by other evidence. 4. UCC Parol Evidence Rule - 2-202: "If the additional terms are such that, if agreed upon, they would certainly have been included in the document in the view of the court, then evidence of their making must be kept from the trier of fact." comment 3. -a more broad acceptance of parol evidence than the "naturally" test of the restatement -unless the contract is deemed integrated, consistent original terms may be added, subject to the certainty test above... A. Consistent Terms? -"It is not sufficient that the existence of the condition is implausible. It must be impossible." or -Question to be answered: are actions the in dispute reasonably harmonious with the stated terms of the contract. 1. integrated. Comepleted final expression of parties intent Gatekeeper 1.1 Fully integrated No parol evidence. Modern: 4 corners of contract. K interpreted them. Danann : clearly expressed Term: nothing said before this contract. Or this is the final......
1.2 Portial MAYBE Contradict ? If Yes, no paral evidence. Additional: If yes, Yes paral evidence. BUT PE always admissible to clarify what is not clear. Not expand K, but explain what is not clear. PE not admissible because writing final and complete expression of parties intent. Mithchell v. Lath Was an prior oral agreement to remove ice house enforceable? No, because was subject to agreement collateral to main contract? And Did oral agreement contradict terms of written agreement ? No Is parol/extrinsic evidence admissible? No, if written agreement is final and complete? But how to figure out if writing is final and compete? New rule: consider everything? Old rule: plain /meaning of contract Masterson v. Sine Were oral limitation on scope of option absolute on tis face admissible under PE rule? Yes ???????????????????????????????????????????????????????????????????????????/ Partially integrated. Some of the term is fully integrated. Exercise Rt. Clear language, intent? Parties want to limit the exercise option. Only family member. Contradict ? If Yes, no paral evidence. Additional: If yes, Yes parol evidence. BUT PE always admissible to clarify what is not clear. Not expand K, but explain what is not clear. Hunt Foods v. Doliner Is oral evidence of limitation on exercise of option admissible? Yes, because writing was not fully integrated and additional term did not contradict writing. If it is certainly included, but not. So it is fully integrated. Four corners rule? About the intent of parties. Stick deference written K. Merger clause; Formal transaction, but the email is not a single writing, but more like oral conversation. So it is not full integrated. So parol may. PE could be another email or oral call. Facts to induce different outcomes. Exchange of emails Sulia sent B Price 90,000. B: it is the deal. S: meet me at my house at 10. B shows personal ck 90,000. UAW-GM V. KSL Recreation If K has merger clause, is oral evidence admissible to show parties did not really intend the writing to be final and complete? No, absent showing of other serious problems.
Danna Realty v. Harris Characteristics of parties Commercial real estate transaction. Something is not parol evidence if it is not some thing in the preliminary negotiation but just facts. The modern procedure pleading: throw everything to judge and they will decide. Partially integrated? Court: ?????????????????????????????????????????????????????????????????????????????????? UCC modify nationall condition 6. MISTAKE AND EXCUSE Mistake Rst 21 Guess truth assume risk Guess truth, assume risk No rescind Guess truth, assume risk, guess mistake assume risk. Wrong party can not rescind. Know truth, see mistake: Wrong party, there is contract so based on mistake, contract is not for cable. M M: no K! -doctrines are merely rules of contractual interpretation for allocating risks not expressly allocated by the parties. -do NOT allow the parties to avoid the liability they have contractually incurred A. Mistake 1. Basics -the doctrine of mistake is said to excuse performance when one or both parties are mistaken about a material fact that exists at the time of their agreement -an unstated condition precedent that was not met... -Relief: parties can argue for enforcement of contract, or for rescission and a return to previous position. If a mistake is made in the contract itself, the parties can argue for reformation 152 mutual mistake to material fact is voidable by the adversely affected party unless he bears risk under 154 153/154 indicate that a party bears the liability of a unilateral mistake when he commits the error. That liability shifts only when the mistaken party did not originally bear the risk of mistake, and 1. the other party knew or should have known that a mistake was being made, or 2. enforcing the contract would be unconscionable.) 154 where the mistake is "mutual" the contract is voidable by the adversely affected party unless the risk is assigned to him. -a) allocated by agreement
-b) limited knowledge with respect to the facts but treats his knowledge as sufficient -c) risk allocated by court on ground that it is reasonable to do so -"as is" clause allocates risk to buyers 2. Mutual Mistake: a mistake to a fact both parties assumed to be one thing, and in fact it was another... -the burden of proving that a mutual mistake should be grounds for voiding a contract rests with the party who wants the contract voided. -"If the existence of a fact is not known to the contracting parties, they cannot have a belief concerning that fact; therefore, there can be no mistake." -"where the existence of a fact is unknowable, the parties cannot have a belief concerning that fact, and they cannot make a mistake about it."
6. MISTAKE AND EXCUSE -doctrines are merely rules of contractual interpretation for allocating risks not expressly allocated by the parties. -do NOT allow the parties to avoid the liability they have contractually incurred A. Mistake 1. Basics -the doctrine of mistake is said to excuse performance when one or both parties are mistaken about a material fact that exists at the time of their agreement -an unstated condition precedent that was not met... -Relief: parties can argue for enforcement of contract, or for rescission and a return to previous position. If a mistake is made in the contract itself, the parties can argue for reformation 152 mutual mistake to material fact is voidable by the adversely affected party unless he bears risk under 154 153/154 indicate that a party bears the liability of a unilateral mistake when he commits the error. That liability shifts only when the mistaken party did not originally bear the risk of mistake, and 1. the other party knew or should have known that a mistake was being made, or 2. enforcing the contract would be unconscionable.) 154 where the mistake is "mutual" the contract is voidable by the adversely affected party unless the risk is assigned to him. -a) allocated by agreement -b) limited knowledge with respect to the facts but treats his knowledge as sufficient -c) risk allocated by court on ground that it is reasonable to do so -"as is" clause allocates risk to buyers 2. Mutual Mistake: a mistake to a fact both parties assumed to be one thing, and in fact it was another... -the burden of proving that a mutual mistake should be grounds for voiding a contract rests with the party who wants the contract voided. -"If the existence of a fact is not known to the contracting parties, they cannot have a belief concerning that fact; therefore, there can be no mistake."
-"where the existence of a fact is unknowable, the parties cannot have a belief concerning that fact, and they cannot make a mistake about it." B. Excuse -the doctrine of excuse discharge performance when an unanticipated future event not contemplated by the agreement renders performance impossible, impracticable, or pointless. -condition subsequent: a contract is formed and the obligations arise, but the subsequent condition extinguishes the obligations... 1. Impossibility and Commercial Impracticability A. Traditional -"in contracts in which the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse performance." -"it was not an absolute contract of delivery under all circumstances, but a contract to deliver so many potatoes, of a particular kind, grown on a specific place, if deliverable from that place." -in UCC these are called identified goods -was the agreement for THOSE goods, or for generic goods. This tells us how the parties allocated risk. If it was THOSE goods it's an implicit condition that those goods must exist for the contract to be valid. If those goods are no longer there, contract is void... -"The owner must be benefited. He should not be enriched at the expense of the contractor. That would be unjust." -unjust enrichment / resitution -"the real question, therefore, is whether the duty of performance can be delegated to another." If it can be, there is no excuse for no performance... B. Modern -"a thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost."
-UCC 2-615: (a) delay in delivery or non-delivery for goods which complies with (b) and (c) is not a breach if performance as agreed was made impractical by reliance on a basic assumption that proved false -if you didn't foresee a risk you should have, that is not a ground for impracticality. (b) seller must allocate available goods (c) must notify the buyer seasonably of delay or non-delivery -also look at whether the parties considered the possibility of something. If they didn't, they couldn't have allocated risk, so leave risk where it falls...
Chapter & Implied Rule 1) General Rule: When the parties' actions after formation are consistent with the fact that they jointly believe in the existence of a contract, but their words (written or otherwise) are incomplete, the courts will imply the terms. P stees v. lemard P Leonard builder PP TT won 2 Facts soil conditions not suite for 3 strong building. Building collapsed 2 time, Builder refuse. Issue: Is builder liable for failure to complete buiding perk: H: Yes, Promise was absolute on its face. Expost ?? Optional precaution: builder not owner PP Appretice buyer D mercer owner eller PP D wins Facts: apprentice practiced to pay + provide good security. Guarantor. Mercer promised to sell. Independent. Covenants: apprentice mercer before 1600 English law:feudalisgn property criminal. Lex mercatona. Fair marchent. 1600-1773 commerce expand.
Implied: facts behivor of parties Constructive: law general rules . Manstiel King incooporated L. Minto C.L. Mrchan Juries Law State Liewclhgy Author 1,2 Architect UCC
782 P.2d 545 Court of Appeals of Utah. Lawrence J. BELL, Anita J. Bell, Plaintiffs and Appellants, v. Reed A. ELDER, Ronald O. Elder, and Allen G. Elder, dba City of Enoch, Ltd., Defendants and Respondents. No. 880202-CA. Nov. 3, 1989. Purchasers brought action against vendors for rescission of contract to buy real property and for restitution of amounts paid thereunder. The First District Court, Cache County, VeNoy Christofferson, J., dismissed. Purchasers appealed. The Court of Appeals, J. Robert Bullock, Senior District Judge, assigned, held that purchasers' failure to tender performance of their concurrent obligations precluded recovery on their claims.
Affirmed. P: bel v. Porcharer D Elder. Vcndor PP E won at Trail Appeal B: ought 10,00 subbvide devid Can buyer recoind for breath if no water No, because it is the condition condinor ofprefancie. restatement of contract s234 service is not stimunenious. Divisibility Supreme Court of Colorado, In Department. Dwight A. JOHN, Plaintiff in Error, v. UNITED ADVERTISING, INC., Defendant in Error. No. 22010. March 4, 1968. Rehearing Denied April 22, 1968. Action by motel owner against advertising company for damages for breach of contract arising out of advertising company's failure to erect two of seven signs in accordance with terms of contract of the parties. The District Court, Arapahoe County, Robert B. Lee, J., entered judgment dismissing plaintiff's claim for relief, and error was brought. The Supreme Court, McWilliams, J., held that evidence sustained findings that plaintiff failed to establish damage by reason of defendant's failure to install two of seven signs it had contracted to install, but in view of defendant's breach, plaintiff was entitled to judgment for rental paid in advance on two signs which were not erected. Judgment reversed and cause remanded with direction. P: John porcher D: United Vendo PP D won at trail P a appeal Facts uinited United States Court of Appeals, Fourth Circuit. Larry K. HOWARD et al., Appellants, v. FEDERAL CROP INSURANCE CORPORATION, Appellee. No. 75-1184. Argued June 13, 1975. Decided June 28, 1976.
Three actions were brought on crop insurance policies issued by the Federal Crop Insurance Corporation. The United States District Court for the Eastern District of North Carolina, Franklin T. Dupree, Jr., J., 386 F.Supp. 570, rendered summary judgment for the corporation and insureds appealed. The Court of Appeals, Widener, Circuit Judge, held that a requirement in a tobacco acreage policy that tobacco stalks on any acreage of certain types of tobacco with respect to which a loss is claimed shall not be destroyed until the Corporation makes an inspection was not a condition precedent to recovery and the failure of the insureds to comply did not work a forfeiture of benefits for the alleged losses. Vacated and remanded.
Introduction to Insurance What is insurance? Shift named risk from insured to insurance company
Insurer writes contract, courts usually interpret contract contra proferentem Insured must have "insurable interest" Distinguish gambling
Policy describes hazards covered and exceptions Hazard must be fortuity/random from point of view of insured to avoid moral hazard Statistics can predict the likelihood of random events for large enough population, not intentional actions
Limit liability with express conditions E.g. Provide insurance company with notice of (possible) event of loss as soon as practicable But what if insured paid all those premiums and then gets no coverage at all? Forfeiture
assessment: element of parol evidence 2. Expression condition PP Howard hfarmer Pp farmer losts trail won appeal Farmer bought crop insurance. Fire, draught, bugs, too much rain. Plowed under plant rual But Ins policy: no plow until ..... Issue: No dotriochonuntial inspect : condition? No forteiet No damage Ocvenment / promise? Damage and wheter harm? RESEANABLE TIME ...................
SUMMARY PROCEDURAL POSTURE: Plaintiff farmers appealed an order from the United States District Court for the Eastern District of North Carolina, at Raleigh, which entered summary judgment in favor of defendant insurer in plaintiffs' action alleging defendant failed to pay crop insurance to plaintiffs. OVERVIEW: Plaintiff farmers sought to recover for losses to their tobacco crop due to alleged rain damage. Defendant insurer denied the claims because, prior to inspection by defendant's adjuster, plaintiffs had either plowed or disked under the tobacco fields in question to prepare the same for sowing a cover crop of rye to preserve the soil. A portion of the policy specifically provided that the stalks on any acreage with respect to which a loss was claimed was not to be destroyed until defendant's adjuster had made an inspection. The trial court held that the inquiry was whether plaintiffs' compliance with the policy provision that insured shall not destroy any stalks until an inspection was made was a condition precedent to the recovery and that the failure of the insureds to comply forfeited benefits for the alleged loss. The provisions of a contract were not construed as conditions precedent in the absence of language plainly requiring such construction. Merely plowing under the tobacco stalks did not of itself operate to forfeit coverage under the policy. OUTCOME: The court reversed the trial court's judgment, concluding that the provisions of the policy not destroy any crops until the insurer made an inspection were not construed as conditions precedent in the absence of language plainly requiring such construction. The court remanded the cause for further proceedings.
CORE TERMS: condition precedent, tobacco, stalks, crop, insured's, plowing, summary judgment, forfeiture, illustration, coverage, warranty, endorsement, inspection, adjuster, disking, predicated, unattended, doubtful, truck, acreage, notice, plowed, policy of insurance, insurer's duty, alarm system, amount of loss, conditional, arbitrate, appraisers, insurer's
17 Mass. 188, *; 1821 Mass. LEXIS 16, **; 17 Tyng 188 William Gray versus Oliver Gardner and Others. [NO NUMBER IN ORIGINAL] SUPREME COURT OF MASSACHUSETTS, SUFFOLK AND NANTUCKET 17 Mass. 188; 1821 Mass. LEXIS 16; 17 Tyng 188
March, 1821, Decided PRIOR HISTORY: Assumpsit on a written promise to pay the plaintiff 5198 dollars, 87 cents, with the following condition annexed, viz., "on the condition that if a greater quantity of sperm oil should arrive in whaling vessels at Nantucket and New Bedford, on or between the first day of April and the first day of October of the present year, both inclusive, than arrived at said places, in whaling vessels, on or within the same term of time the last year, then this obligation to be void." Dated April 14, 1819. The consideration of the promise was a quantity of oil, sold by the plaintiff to the defendants. On the same day another note unconditional had been given by the defendants, for the value of the oil, estimated at sixty cents per gallon; and the note in suit was given to secure the residue of the price, estimated at eighty-five cents, to depend on the contingency mentioned in the said condition. At the trial before the chief justice, the case depended upon the question whether a certain vessel, called the Lady Adams, with a cargo of oil, arrived at Nantucket on the first day of October, 1819, about which fact the evidence was contradictory. The judge ruled that the burden of proving the arrival within the time was on the defendants; and further that, although the vessel might have, within the time, gotten within the space which might be called Nantucket Roads, yet it was necessary that she should have come to anchor, or have been moored, somewhere within that space before the hour of twelve following the first day of October, in order to have arrived, within the meaning of the contract. The opinion of the chief justice on both these points was objected to by the defendants, and the questions were saved. If it was wrong on either point, a new trial was to be had; otherwise judgment was to be rendered on the verdict, which was found for the plaintiff. DISPOSITION: Judgment on the verdict.
CORE TERMS: oil, arrive, quantity, arrival, vessel, port, promise to pay, happening, moored, anchor, void
5000 extra Unless day adams arrive before in midnight 15 60 70 5000, 5200, Pay extra if oil in short supply No extra supply plenty common sense: ship not arrive until it pools. Condition precedent subsequent Revie patral Old question 692
William L Clark, Appellant, v. John B. West, Respondent CASE SUMMARY PROCEDURAL POSTURE: Appeal from an Appellate Division of the Supreme Court in the Second Judicial Department (New York) order that reversed an earlier interlocutory judgment and sustained defendant's demurrer to plaintiff's complaint that sought additional compensation under a publication employment contract between the parties. OVERVIEW: The parties entered into a publication employment contract. The contract bound plaintiff to abstain from alcohol during the course of his employment in order to receive a higher per page royalty rate. Plaintiff did not entirely abstain from drinking liquor while he was writing and defendant in turn refused to pay plaintiff the higher per page rate. Plaintiff brought suit to recover the higher royalty rate after one of his books was published. The trial court reversed an early interlocutory judgment and sustained defendant's demurrer. The appellate court reversed the trial court's grant of defendant's demurrer. The court held that plaintiff's complaint contained sufficient allegations that, if proven, would establish that defendant expressly waived the sobriety condition precedent by, with full knowledge of plaintiff's non-observance of the alcohol abstinence stipulation, not only accepting plaintiff's completed manuscript without objection but repeatedly assuring plaintiff that he would receive the higher royalty rate. OUTCOME: Appellate court reversed, holding that plaintiff alleged sufficient facts in his complaint that, if proven, would establish that defendant expressly waived the condition precedent of plaintiff's sobriety by knowing plaintiff did not comply with the stipulation, accepting plaintiff's manuscript without objection, and assuring payment of the higher royalty rate.
Civil law German France Common law England ca us Au NE I Sedmark D Chevrolet PP II won 2 Sedmark ask about special corvette 500 dept+ Did sedmandi have contract ? Yes Normal calcodte money damage But could replace his car in market 6000 but not available Specific performance relating unique II Klein/buyer D Pepsco seller PP II won specific performance o appeal money damage K formed W/Pepsi then perp refutsed warrant Not Unique enough
k wanted used jet
Certainty Limitation Drews Company Inc v. Ledwith-Wolfe Associates, Inc PP Lwmosting Lost at trailbut won on appeal D- low contract removate celawyp change guilty dispute *Draws claim lien* II millowner D conmmon camer PP A wins Facts Shalt broke mill stopped Shalt + London return delayed Issue: mill owner profit millclosed waiting for shaft II Spang / for Pit Sub Torrington GC Aetna / Guaranter PP T won at trial appeal T Gc+ agreed to sell steel by Jone delivered in FP had higher buiding costs due to delay
August
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